The epidermis of mammalian skin is a collection of individual keratinocytes acting in concert to provide a protective barrier against injury, infection, and dehydration. Normal function is maintained through regeneration originating within basally located keratinocyte stem cells. It is generally accepted that microenvironment-dependent activation of epidermal stem cells is necessary to maintain their multipotency. In addition to regulating the fate of normal stem cells, local microenvironmental influences affect the outcome of various stem cell-derived epidermal tumors. This suggests that the local microenvironment plays a dominant role in the regulation of epidermal stem cells. Specific aim I will identify factors that define active stem cell microenvironments through laser capture microdissection and gene expression profiling. Specific aim 2 will determine the necessity of microenvironment association in maintenance of stem cell potency through the generation of transgenic mice overexpressing the promigratory DeltaT protein specifically within epidermal stem cells. Specific aim 3 will determine whether the local microenvironment is sufficient to regulate stem cell differentiation potential using interfollicular stem cell-follicular microenvironment grafts.